We Sell Our Condo (Instead of Renting It)
(Part Four of Renting Out a Condo)
By Steve Gillman - March, 2013
Sometimes plans are just a way to get started doing something.
Hopefully that something works out well, even if it was not part
of the original idea. If you have read the first three installments
of this series on buying
a condo as a rental, you know that we ran into quite a few
unexpected problems. We had a few repairs that we did not budget
for, and we discovered that stackable washer/dryer combinations
are very expensive.
In the most recent post (in December) I related how we learned
our lessons about screening tenants. I probably should have gone
into some detail about how to do a search for criminal records
online, but the primary part of the process can be explained
easily enough: Just search the person's name and "mug shot"
(or "mugshot") on Google -- and use any names the prospective
tenant uses or might have used in the past.
In any case, we decided to let fate decide how we would profit
from our investment. With no renter by December we listed the
condo for sale. We kept the rental listing active as well, with
the idea that we would either sell it if we got an offer that
netted us some small profit, or we would rent it out if that
happened first. Nothing much happened in December, except for
a good offer that went by the wayside due to a sick relative
in the buyer's home country. It can be tough to think about buying
a condo when a loved one is ill and the condo is in another country.
By January the "fiscal cliff" was postponed, and
some laws that relate to real estate were renewed in Washington,
so people felt safer buying property. Our local newspaper announced
that prices of homes had risen something like 17% in 2012, prompting
people to think abut buying before things get too expensive.
A rise like that sounds suspiciously like a bubble getting reinflated,
but in any case it was apparently motivating to potential buyers.
We started to have regular showings again.
We had a verbal offer that sounded good to us. But then it
somehow dropped by many thousands of dollars once it was put
on paper. There were also some "weasel clauses" in
the contract that we wouldn't have agreed to in any case.
Finally, toward the end of January, we got a solid offer.
We closed in early March. We didn't make enough profit to worry
about a heavy tax bill, but we made enough to be happy about
being done with the process for now (we may buy another rental
Why Sell Our Condo?
We had a few good reasons for wanting to sell the condo, even
though we initially intended to rent it out. As it turns out,
renting a condo can be tricky. The potential tenants have to
apply for association approval, paying $100 for that and $70
for a background check (and they do not get these back if they
are rejected). We would prefer more control. The condos here
are renting for a little less than we thought as well, and the
dues went up just after we bought the place. These two factors
made for a lower return on the investment.
In the end, we would have rented it out if that happened first.
We were tired of paying the expenses without any income after
all. But as an investment, as measured by the cash-on-cash return,
we could do better with our money elsewhere in town. We might
also consider buying a small business now that we have freed
up our capital.
The key thing was that whether we ended up renting it or selling
the condo we were going to make some money, and more than the
1% we make on our checking account (yes, you can still get 1%
on checking). That flexibility is one of the things that I like
about real estate.